Rise in Core Deposits Fueled an Uptick in Loan Growth FAIRFAX, Va., July 29, 2024 /PRNewswire/ -- MainStreet Bancshares, Inc. (NASDAQ:MNSB, MNSBP)), the holding company for MainStreet Bank, reported net income of $2.6 million for the second quarter of 2024. Total deposits reached $1.8 billion in the second quarter, an increase of 10.2% from the second quarter of 2023. Loan growth is up 8.6% over the same period, also reaching $1.8 billion. "We are now nine full quarters into the current interest rate cycle, and the entire industry has felt the effect of higher deposit costs.  I'm happy to report that we experienced the softest impact this quarter, with our net interest margin settling in at a healthy 3.15%," said Jeff W. Dick, Chairman and CEO of MainStreet Bancshares, Inc. and MainStreet Bank.  "We see signs of an improving net interest margin going forward, but FOMC actions or other unforeseen externalities could affect momentum.  Externalities aside, as our strategic initiatives start to bear fruit, we are confident and optimistic that the trail we have blazed to offer Banking as a Service (BaaS) will positively affect our net interest margin and our bottom line." "We remain focused on caring for our customers and meeting their continuing banking and borrowing needs while judiciously adding promising new relationships," said Abdul Hersiburane, President of MainStreet Bank. "We've built our core customer funding sources up to 78% of total deposits." Loan growth in the second quarter was driven by a healthy rise in demand for commercial and industrial borrowing and in high-quality owner-occupied commercial real estate lending, a traditional area of strength for MainStreet Bank. The Bank maintains a strong portfolio of earning assets, with very nominal AOCI exposure.  The loan portfolio remains solid with net charge offs representing a mere eight basis points of average gross loans.  Nonperforming assets account for 0.99% of total assets. "We continue to carefully underwrite each loan opportunity and the lending team remains engaged with each borrower throughout their project lifecycle.  If a borrower experiences a challenge, we work with them to face that challenge promptly and transparently," said Tom Floyd, EVP and Chief Lending Officer at MainStreet Bank. "We have a meticulous understanding of our loan book and a rigorous risk management mindset." Banking-as-a-ServiceIn recent months, the weaknesses of other embedded banking solutions have been exposed—to the detriment of banks, their fintech clients and their end-customers.  The Avenu team digested all the lessons that could be learned from these weaknesses and is implementing final enhancements to ensure a scalable and compliance-rich solution.  Avenu is live and in limited production until the final enhancements are fully integrated. Avenu Avenu is the first and only embedded banking solution that connects our partners and their apps directly and seamlessly to our purpose-built Avenu core solution. We are not a sponsor bank without our own technology, and we are not a middleware software company without our own bank. We are Avenu, a leading financial technology company owned by an established community bank in the heart of Washington, D.C. Avenu's clients are fintechs, social media, application developers, money movers, and entrepreneurs. They all have one thing in common: They are innovating how money moves to solve real-world issues and help communities thrive. We are focused on servicing our community and creating long-term business relationships. ABOUT MAINSTREET BANK: MainStreet operates six branches in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington, D.C. MainStreet Bank has 55,000 free ATMs and a fully integrated online and mobile banking solution. The Bank is not restricted by a conventional branching system, as it can offer business customers the ability to Put Our Bank in Your Office®. With robust and easy-to-use online business banking technology, MainStreet has "put our bank" in thousands of businesses in the metropolitan area. MainStreet Bank has a robust line of business and professional lending products, including government contracting lines of credit, commercial lines and term loans, residential and commercial construction, and commercial real estate. MainStreet is an SBA Preferred Lender. From sophisticated cash management to enhanced mobile banking and instant-issue Debit Cards, MainStreet Bank is always looking for ways to improve our customer's experience. MainStreet Bank was the first community bank in the Washington, D.C., metropolitan area to offer a full online business banking solution. MainStreet Bank was also the first bank headquartered in the Commonwealth of Virginia to offer CDARS – a solution that provides multi-million-dollar FDIC insurance. Further information on the Bank can be obtained by visiting its website at mstreetbank.com. This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. The statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions are intended to identify such forward-looking statements. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, future impacts of the novel coronavirus (COVID-19) outbreak, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.   MainStreet Bancshares, Inc. UNAUDITED CONSOLIDATED BALANCE SHEET INFORMATION (In thousands) June 30, 2024 March 31, 2024 December 31, 2023* September 30, 2023 June 30, 2023 ASSETS Cash and cash equivalents Cash and due from banks $ 41,697 $ 49,208 $ 53,581 $ 44,912 $ 67,700 Federal funds sold 49,762 75,533 60,932 76,271 30,341 Total cash and cash equivalents 91,459 124,741 114,513 121,183 98,041 Investment securities available for sale, at fair value 57,605 58,699 59,928 56,726 60,579 Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $0 for all periods 16,036 17,251 17,275 17,565 17,590 Restricted equity securities, at amortized cost 26,797 23,924 24,356 20,619 20,304 Loans, net of allowance for credit losses of $17,098, $16,531, $16,506, $15,626, and $16,047, respectively 1,778,840 1,727,110 1,705,137 1,681,444 1,637,484 Premises and equipment, net 13,787 14,081 13,944 14,275 14,427 Accrued interest and other receivables 11,916 10,727 12,390 11,184 10,256 Computer software, net of amortization 17,205 15,691 14,657 13,373 12,266 Bank owned life insurance 38,901 38,609 38,318 38,035 37,763 Other assets 41,200 39,182 34,914 47,087 40,641 Total Assets $ 2,093,746 $ 2,070,015 $ 2,035,432 $ 2,021,491 $ 1,949,351 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Non-interest bearing deposits $ 314,636 $ 348,945 $ 364,606 $ 394,859 $ 388,992 Interest bearing demand deposits 179,513 165,331 137,128 76,423 71,308 Savings and NOW deposits 60,867 46,036 45,878 46,550 51,294 Money market deposits 476,396 446,903 442,179 461,398 380,500 Time deposits 723,951 725,520 696,336 703,960 701,289 Total deposits 1,755,363 1,732,735 1,686,127 1,683,190 1,593,383 Federal funds purchased — — 15,000 — 30,000 Subordinated debt 72,841 72,741 72,642 72,543 72,444 Other liabilities 40,827 41,418 40,146 52,015 43,016 Total Liabilities 1,869,031 1,846,894 1,813,915 1,807,748 1,738,843 Stockholders' Equity: Preferred stock 27,263 27,263 27,263 27,263 27,263 Common stock 29,452 29,514 29,198 29,188 29,177 Capital surplus 66,392 65,940 65,985 65,407 64,768 Retained earnings 109,651 108,334 106,549 102,694 97,646 Accumulated other comprehensive loss (8,043) (7,930) (7,478) (10,809) (8,346) Total Stockholders' Equity 224,715 223,121 221,517 213,743 210,508 Total Liabilities and Stockholders' Equity $ 2,093,746 $ 2,070,015 $ 2,035,432 $ 2,021,491 $ 1,949,351 *Derived from audited financial statements   MainStreet Bancshares, Inc. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION (In thousands, except share and per share data) Year-to-Date Three Months Ended June 30, 2024 June 30, 2023 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 INTEREST INCOME: Interest and fees on loans $ 62,034 $ 55,586 $ 31,546 $ 30,487 $ 30,849 $ 29,750 $ 28,855 Interest on investment securities Taxable securities 865 926 430 435 451 459 407 Tax-exempt securities 538 529 268 270 268 268 265 Interest on federal funds sold 2,264 2,311 1,083 1,182 1,510 1,217 1,179 Total interest income 65,701 59,352 33,327 32,374 33,078 31,694 30,706 INTEREST EXPENSE: Interest on interest bearing demand deposits 4,032 594 2,172 1,860 1,058 240 251 Interest on savings and NOW deposits 347 255 190 157 146 145 147 Interest on money market deposits 10,816 4,129 5,638 5,178 5,639 4,156 2,926 Interest on time deposits 17,861 11,221 9,027 8,833 8,257 7,526 7,077 Interest on federal funds purchased 298 239 191 107 25 35 201 Interest on Federal Home Loan Bank advances 46 919 — 46 118 186 13 Interest on subordinated debt 1,640 1,632 820 820 828 828 820 Total interest expense 35,040 18,989 18,038 17,001 16,071 13,116 11,435 Net interest income 30,661 40,363 15,289 15,373 17,007 18,578 19,271 Provision for (recovery of) credit losses 443 921 638 (195) 466 255 638 Net interest income after provision for (recovery of) credit losses 30,218 39,442 14,651 15,568 16,541 18,323 18,633 NON-INTEREST INCOME: Deposit account service charges 959 1,125 490 469 510 514 535 Bank owned life insurance income 583 514 291 292 283 272 259 Net loss on securities (48) — (48) — — — — Other non-interest income 270 174 140 130 68 177 16 Total other income 1,764 1,813 873 891 861 963 810 NON-INTEREST EXPENSES: Salaries and employee benefits 14,972 14,216 7,484 7,488 7,129 6,924 6,595 Furniture and equipment expenses 1,875 1,270 940 935 804 713 772 Advertising and marketing 1,020 1,495 566 454 271 577 698 Occupancy expenses 849 912 415 435 397 375 426 Outside services 1,614 994 839 774 352 697 504 Administrative expenses 471 426 229 242 219 277 211 Other operating expenses 4,190 3,242 2,195 1,996 1,964 1,866 1,646 Total non-interest expenses 24,991 22,555 12,668 12,324 11,136 11,429 10,852 Income before income tax expense 6,991 18,700 2,856 4,135 6,266 7,857 8,591 Income tax expense 1,068 3,602 238 830 1,120 1,516 1,645 Net income 5,923 15,098 2,618 3,305 5,146 6,341 6,946 Preferred stock dividends 1,078 1,078 539 539 539